Income Tax (Earnings and Pensions) Act 2003 section 77

Power of trustees to raise funds to subscribe for rights issue

Section 77 deals with the power of Share Incentive Plan trustees to sell some rights issue entitlements in order to fund the exercise of other rights from the same issue.

• When a rights issue is made in respect of shares held in the plan, the trustees receive rights to subscribe for new shares
• Trustees may sell some of those rights to raise sufficient funds to exercise the remaining rights
• This provides a practical mechanism so that trustees do not need to find external cash to take up rights issues on behalf of participants
• This power is subject to the overriding duty to act in accordance with the participant's directions under paragraph 72